By Sue Pleming

UNITED NATIONS, Jan 8 (Reuters) - Arab ministers haggled with Western powers over U.N. action to end violence in Gaza, pushing for a binding resolution while the United States sought a more diluted response.

U.S. Secretary of State Condoleezza Rice and the foreign ministers of France and Britain stayed on an extra day in New York to push their case with Arab ministers, who face mounting anger on the street at home if they return without a strong U.N. response to Israel's invasion of Gaza last month.

"We believe there is still work to do," Rice told reporters after late-night discussions between Western and Arab ministers at U.N. headquarters in New York on Wednesday.

As diplomats argued over whether to adopt a resolution, violence continued on the ground. Israeli planes bombed the Gaza Strip on Thursday and tanks pounded Palestinian guerrillas for the 13th day in response to Hamas attacks deep into Jewish state.

The United States and its allies want a presidential statement to emerge from the U.N. Security Council, far weaker action than a robust U.N. resolution being pushed by Arab states, which Israel strongly opposes.

Negotiations were set to resume at the United Nations at 10 a.m. EST (1500 GMT) and Britain's foreign minister said it was important that there be unity in tackling the Gaza crisis.

"The world needs to hear the united voice of the Security Council," said British Foreign Secretary David Miliband, who also extended his trip to New York to try to reach a deal with Arab ministers.

Egyptian Ambassador Maged Abdelaziz insisted a resolution was necessary to halt the fighting in which more than 650 Palestinians have been killed.

"We do not accept the presidential statement as it stands alone, meaning that the ministers can ... go home and arrive to find the fighting still going on," he told reporters.

Another Arab diplomat, who declined to be named, said the United States was holding back on calling for an immediate ceasefire, but rather referring to a "durable and sustainable" truce which would take longer to draw up.

"Our view is get a ceasefire now," said the Arab diplomat. "It's about principles and taking a position."

The Arabs want a Libyan-drafted resolution which focuses heavily on Israel's actions and makes only a fleeting reference to Palestinian rocket-firing. It "demands an immediate and permanent ceasefire in the Gaza Strip."

The nonbinding statement drafted by the three Western powers contains no demands, but "stresses the urgent need for an immediate and durable ceasefire." It also voices strong concern over the humanitarian crisis in Gaza.

Also under discussion is an Egyptian ceasefire proposal between Hamas and Israel, which the United States backs while trying to include its own elements.

The Egyptian plan, partly brokered by France, calls for an end to the rocket attacks on Israel, the opening of Gaza border crossings and an end to weapons smuggling into Gaza.

Hamas said it was looking at the Egyptian plan while Israel said there was a broad understanding of the "general principles" outlined in the offer from Cairo. (Editing by Mohammad Zargham)

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